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The following income statement is for T Company's two products, A and B: Product A Product B Revenue $91,000 $85,000 Total variable costs 51,870 43,350
The following income statement is for T Company's two products, A and B:
Product A | Product B | |||
Revenue | $91,000 | $85,000 | ||
Total variable costs | 51,870 | 43,350 | ||
Total contribution margin | $39,130 | $41,650 | ||
Total fixed costs | ||||
Avoidable | 18,058 | 33,090 | ||
Unavoidable | 13,622 | 22,060 | ||
Profit | $7,450 | $-13,500 |
If T Company drops Product B because it shows a loss and is able to use the vacant space to increase sales of Product A by $26,700, with $5,000 of additional fixed costs, what will be the effect on firm profits?
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